Wednesday, 2 October 2013

US Government Shutdown

In my last post on “Ipsative Lives” I talked about the value of natural experiments in testing the impacts of forced life-choices. Such is the power of this little blog that the US Government immediately shut down, and obligingly afforded us a test case. There is no need for a detailed explanation. One faction believes in slightly larger government and the other in smaller government. The factions must agree on the management of the national debt, and whether to extend further credit to themselves, which first of all requires admitting that they are overdrawn.

From a psychological point of view this presents some interesting possibilities. Each faction has a significant preference for a particular explanation about the importance of government and the significance of national debt. Those conflicting views can now be tested. The temporary withdrawal of some governments services, brief as this interruption might be, should have some tangible effects. Another 15 days of shutdown, regrettable or desirable as it may be depending on political stances, should afford a measurable impact.

Belgium survived 589 days without a government in 2010-2011, and we can only hope/regret that it takes that long in the US case so as to provide a proper basis for data collection. It might be argued that the case of Belgium should be sufficient for even the most exacting of statisticians, but Belgium constitutes a special case which it would be too unkind to spell out in detail. The Grand Place is one of the beautiful public spaces in Europe, the neighbouring streets have excellent beer and chocolates, but after that one goes to France or Holland.

What will be interesting to see is whether the opposed US factions are able to draw any agreed conclusions after the event. I assume that if nothing much happens, and the country is not perceptibly affected by the shutdown, this should favour the smaller government faction. I suppose that the pro-government faction could argue that many aspects of government have carried on as usual (I assume that tax collection and benefits and so on continue, as does the Federal Reserve) and that there were accumulated benefits deriving from government which have slowly run down during the shutdown. Perhaps. The stronger argument, as any full blooded British journalist will tell you, is bodies piling up in the mortuary. There must be some photographable failure to drive citizens back into the hands of the legislators. When it happens, it can usher in significant attitude change.

My understanding of the situation is that if the US really goes for many days without spending money on government services, then they will certainly be richer in terms of their bank balances, but might actually be poorer if the government provides them with services they cannot provide themselves at comparable cost. Economists should have a field day determining the true balance sheet.

In terms of attitude change, I doubt whether anything short of a dramatic national failure will have any impact on political points of view. My bet is that those preferences will survive, whichever way the evidence goes.

Britain is currently unable to organise a government shutdown, but from time to time the fire service goes on strike. It is claimed, though I have never seen the evidence, that in those circumstances the number of reported fires goes down. This seems strange, until you realise that the majority of fires are due to some form of carelessness. Knowing that the brave fire fighters were not on call, citizens took more care to stub out their cigarettes properly.

I wait with interest for the first paper to show the effects of the government shutdown on ……. something.